WSI Industries Reports Second Quarter Operating Results
24 March 2000
WSI Industries Reports Second Quarter Operating Results
WAYZATA, Minn.--March 23, 2000--And Full-Year Fiscal 2000 Earnings
WSI Industries, Inc. today reported that sales for the second quarter of fiscal 2000 ended February 27 increased 107% to $7,711,000, from $3,729,000 in the year-earlier period. The Company reported a net loss of $223,000 or $.09 per diluted share, compared to the net loss of $421,000 or $.17 per share in the second quarter of fiscal 1999.
Michael J. Pudil, president and chief executive officer, commented: "The second quarter of 2000 was an important transitional period for WSI. During this quarter, we completed our plant consolidation process, which involved costs that affected our near-term earnings. However, we started realizing the initial positive impact of this strategy late in the second quarter. In February, WSI was solidly profitable, paced by a gross margin in excess of 20%, which surpassed our historic norm by a considerable margin. Going forward, we believe WSI's performance will improve substantially in this year's third and fourth quarters, reflecting the reduced overhead and strengthened efficiencies flowing from our plant consolidation, along with growing sales that are expected to exceed $30 million for the full year. As a result, we believe WSI should report significant earnings for all of fiscal 2000."
The strong second quarter sales growth reflects the February 1999 acquisition of Taurus Numeric Tool, Inc. and the August 1999 acquisition of Bowman Tool and Machining, Inc. As a result of these acquisitions, the Company possesses a diversified base of business serving five major markets. The Company's pre-acquisition business also strengthened in this year's second quarter, reflecting higher manufacturing volumes of agricultural equipment. No single industry accounted for more than 35% of total sales in this year's first half.
The Company's second quarter net loss resulted primarily from moving expenses and start-up manufacturing inefficiencies related to the plant consolidation initiative, which were partly offset by a gain on the sale of excess manufacturing equipment. All of the Company's manufacturing has been moved into the Taurus and Bowman facilities. The Long Lake, Minnesota, facility has been listed for sale, with proceeds from this pending transaction to be used for reducing long-term debt.
For the first half of fiscal 2000, net sales totaled $15,006,000, up 60% from $9,370,000 a year ago. The Company's net loss for this period came to $172,000 or $.07 per diluted share, compared to the net loss of $144,000 or $.06 per diluted share in last year's first half. First half operating results were affected by severance, relocation and other expenses related to the consolidation, which were partially offset by gains on the termination of the Long Lake defined benefit pension plan and on the sale of excess manufacturing equipment.
WSI Industries, Inc. is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including agriculture, construction, aerospace and avionics, recreational vehicles and computers.
The statements included herein which are not historical or current facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. There are certain important factors which could cause actual results to differ materially from those anticipated by some of the statements made herein, including the Company's ability to obtain additional manufacturing programs and retain current programs and other factors detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended August 29, 1999
WSI INDUSTRIES, INC.
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CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
In thousands, except per share amounts
Second Quarter Ended Six Months Ended
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Feb. 27, Feb. 28, Feb. 27, Feb. 28,
2000 1999 2000 1999
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Net sales $7,711 $3,729 $15,006 $9,370
Cost of products sold 6,613 3,563 12,880 8,379
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Gross margin 1,098 166 2,126 991
Selling and
administrative expense 1,216 579 2,196 1,122
Pension curtailment (gain) (232)
Gain on sale of equipment (126) (395)
Severance costs 249
Interest and other income (32) (66) (39) (133)
Interest and other expense 263 67 516 127
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Profit from operations
before income taxes (223) (414) (169) (125)
Income taxes 0 7 3 19
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Net earnings ($223) ($421) ($172) ($144)
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Basic earnings per share ($0.09) ($0.17) ($0.07) ($0.06)
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Diluted earnings per share ($0.09) ($0.17) ($0.07) ($0.06)
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Weighted average number
of common
shares outstanding 2,462 2,452 2,459 2,450
Weighted average number
of common
and dilutive potential
common shares 2,535 2,548 2,519 2,550
CONDENSED BALANCE SHEETS (Unaudited)
In thousands
February 27, February 28,
2000 1999
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Assets:
Total Current Assets $7,342 $7,104
Property, Plant, and Equipment, net 11,130 9,508
Intangible Assets 5,541 2,687
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Total Assets $24,013 $19,299
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Liabilities and Shareholders' Equity:
Total current liabilities $5,708 $3,830
Long-term debt 10,050 7,244
Long-term pension liability 121 366
Shareholders' equity 8,134 7,859
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Total Liabilities and
Shareholders' Equity $24,013 $19,299
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